The following table shows the marginal revenues earned by a price discriminating monopolist in two different markets.Table 11.5

-Refer to Table 11.5. If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?
A)4 units in market X; 1 unit in market Y
B)4 units in market X; 2 units in market Y
C)2 units in market X; 3 units in market Y
D)3 units in market X; 3 units in market Y
E)3 units in market X; nothing in market Y

Question

The following table shows the marginal revenues earned by a price discriminating monopolist in two different markets.Table 11.5
 
-Refer to Table 11.5. If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?
A)4 units in market X; 1 unit in market Y 
B)4 units in market X; 2 units in market Y 
C)2 units in market X; 3 units in market Y 
D)3 units in market X; 3 units in market Y 
E)3 units in market X; nothing in market Y

Quizplus · Accepted Answer

To maximize profit, the monopolist will supply in each market where MR=MC. At a marginal cost of $30, the profit-maximizing quantities are found where MR=30. In market X, this occurs at a quantity of 3 units (where MR=$33). In market Y, this occurs at a quantity of 3 units (where MR=$27). Therefore, the monopolist will supply 3 units in each market, for a total quantity of 6 units. Thus the correct choice is D.

The Following Table Shows the Marginal Revenues Earned by a Price